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Brand Value Erodes in Semiconductor Industry – Analysts

Processor Brands Weaken, Says Research Firm

by Anton Shilov
05/22/2007 | 04:03 AM

A recent survey of technology early adopters indicates that while a semiconductor product brand may be identified, it is often not associated with the company that manufactures the product. Moreover, early adopters did not recognize technology behind the product, says market research firm In-Stat.

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The survey included a sampling of newer brands from Advanced Micro Devices, ATI, currently graphics product group of AMD (which was figured into the results), IBM, Intel Corp., Nvidia Corp., and Via Technologies.

According to results, not only early adopters of new products could not identify their manufacturer properly in 17% - 50% of cases, they also incorrectly identified the platform for which the product was developed, e.g., acquired AMD processors for Intel platforms or PCI Express graphics cards for systems with accelerated graphics port (AGP).

But developers of central processors and graphics processors seemed to have put a lot of effort into giving end-users a wrong impression about the actual product. Introduction of complicated model number schemes, which may reveal something about positioning of a product, but may not reveal its performance, power consumption capabilities and other peculiarities. For example, Intel openly claims that its model numbers of its chips are not “a measure of performance”, in reality, those model numbers hardly reflect a lot for a typical buyer: the difference between Intel Core 2 Duo E6550 and E6540 processors (which work at 2.33GHz, have 4MB of L2 cache and use 1333MHz processor system bus) is unclear for the end-user.

“In-Stat has long contended that evolving purchasing patterns resulting from changing usage patterns of computing solutions will likely weaken processor brands. The new alphanumeric numbering schemes implemented by several processor vendors appear to have accelerated this trend,” said Ian Lao, an In-Stat analyst.

Graphics processor brands GeForce and Radeon have greater than 40% recognition rates, though, it does not necessary mean that end-users know what they get. Both ATI and Nvidia rename their graphics chips so to present them as a newer technology. For example, ATI’s recently unveiled Mobility Radeon HD 2300 is a previous-generation Mobility Radeon X1300, while Nvidia’s recently added GeForce 7050/7025 chips are really GeForce 6200-series products.

The observer gave an example that treatment with the Celeron and Pentium brands in the recent years ultimately lowered their value for Intel.

“Recent moves away from the Pentium brand, coupled with attacks on the Celeron brand by AMD, have weakened Intel’s once near dominance in this area,” Mr. Lao said.

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